Economic observer On-line reporter Li Xiaodan The Chinese economy is still "big adjustments" in the critical period, and this process will continue for 3-5 years. This is the judgment of the Central Bank of China on the report on economic and financial outlook in China of 20 November. The report also predicts that GDP growth in China will be about 6.5% next year, and we need to protect itself from the superposition of external shocks and internal "big adjustments".

Zhong Hong, deputy director of China's International Finance Institute, said the US dollar would raise interest rates once in December 2018 and raise interest rates 2-3 times in 2019. The US economy will maintain positive growth but the rate of growth will decline.

"The global tightening of liquidity can lead to stock market fluctuations, bonds and exchange rates in developed economies." The vulnerability of emerging economies is based on leverage, high external financial needs, short-term foreign currency debt, unstable investors, and the risk of commercial friction. Zhong Hong said.

Chen Weidong, director of China's International Finance Institute, said the world economy is still facing many uncertainties in 2019 and the world economy is facing rising risks. China has to do a good job with the expected management.

The three main risks of the global economy in 2019

The global economy continued to recover in 2018, but the differentiation was obvious. The growth rate of large economies was approaching the peak and some emerging economies were experiencing financial turmoil.

The report pointed out that the risks of global economic growth will increase. The monetary policy rate in 2019 will become the "central theme" of monetary policy. At the same time, there may be a potential risk of US economic growth and a global debt burden that deserves great caution.

From a regional point of view, the US economic expansion has entered an advanced stage and the European recovery has slowed, the Asia Pacific region is generally stable, and some countries have increased financial instability, with the gradual recovery of Latin America, the Middle East and Africa from fluctuations.

The current pattern of international trade is before reconstruction, the multilateral trading system is frustrated, the WTO reform is difficult, and regional trade agreements are rapidly evolving. Global dollar liquidity is shrinking, and emerging markets are facing huge challenges.

The non-financial sector in developed economies is currently heavily used and growing, and its total debt has risen from US $ 113 trillion in 2008 (200% of GDP) to US $ 167 trillion (almost 250% of GDP). Raising interest-bearing debt will affect the profitability and ability to repay corporate debt, which will reduce credit quality and bank credit.

Year 2019 is also the year in which the emerging economies are emerging most. Extinction accounts for almost $ 2 trillion in bonds and loans, and foreign currency debt in the non-banking sector accounts for 14% of GDP, which is only slightly below the historical value in 1999. Point 17%. Among them, the dollar debt rose to $ 3.7 trillion.

The report considers that, given that the US dollar continues to appreciate that the cost of financing is rising and that investors' risk pressure is falling, the balances of countries that lend strongly to foreign currencies will be under pressure and pressure on debt repayment and refinancing will increase. The continuing slowdown in global trade will further reduce earnings from exchange rates in emerging economies, increase the current account deficit and further increase the difficulty of refinancing top foreign debt companies. The weakening of the local currency, the debt and the pressure of capital outflow can continue to grow, leading to a vicious circle.

The report also highlighted that, although fiscal stimulus policies such as Trump's tax cuts have been introduced, their effects will gradually disappear by 2020. As the US tax reduces subsidies and tightens monetary policy, the sustainability of US economic growth is greater Challenges, global economic recovery faces greater uncertainty, and also affect the confidence of financial market participants, causing fluctuations in US stocks and even global capital markets.

For China, developed economies tighten their liquidity and pay special attention to the development of capital flows.

Wang Youxin, an international financial researcher at the Bank of China's International Finance Institute, said current capital flows in China are relatively stable overall, and capital flows in 2019 will remain stable.

Since the third quarter, however, the risk-increasing trend and the situation of foreign payments are the same. This phenomenon should be given full attention.

Wang Youxin believes that in order to ensure a stable capital flow, China can use good adjustment tools such as price instruments and capital flow management regulators and expand openness to support cross-border capital inflows. From the balance of payments we have seen it for almost a year now. The net inflow of bonds and capital investment has increased, suggesting that the inclusion of A-type shares in alum contributed to attracting capital inflows.

For future management of cross-border capital flows, Wang Youxin said the leadership would be stricter.

External factors and "big adjustments"

In 2018, driven by major changes in domestic and international environment, China's economic growth has stabilized and slowed down and has overall "three falls and two stability" characteristics.

The report predicts that GDP will increase by 6,6% in 2018, which is 0.3 percentage point higher than the previous year, the CPI will increase by 2.2%.

"The situation faced by the Chinese economy will become more complicated in 2019," said Zong Liang, chief bank officer of the Bank of China Banking Institute.

The report points out that the Chinese economy is in a "critical time" at a critical time, and there are large divisions, major modifications and significant integration between different industries, different regions, entities and finance, traditional finance and new financial resources. China's economic GDP will increase by 6.5% in 2019, a moderate slowdown since 2018.

Zong Liang said that in 2019, active fiscal policy should focus on tax cuts and fee cuts, and to raise the fiscal deficit appropriately. Monetary policy should support the transformation of "broad currency" into "a broad area of ​​credit." Regulatory policy must follow the general direction, but it must also be controlled. Good rhythm to avoid "risk of risk", ie to resolve new risks and to alert new risks.

The report also pointed out that the Chinese economy should protect itself from external factors and "reconciliation" with the same frequency response in 2019. The adjustments currently facing the Chinese economy include four aspects: one is the accelerated conversion of new and old kinetic energy in different industries, the other being "glacier" in different regions. "Two Heavens," the southern region is economically active, the structure is accelerating, and overall performance is good. However, the transition in the northern region is difficult, the investment is slowing, the business environment has to be optimized and the overall performance is relatively weak (for details see the subject of this report). Traditional finances have undergone transformation and changes in pressure. The upcoming finances have gone from "running" to "slow walking" and standards have become a topic that each felt unprecedented pressure from the stage of mutual competition to the stage of competition. The Chinese economy is climbing through a "middle-income passenger" at a critical time. Changes in the market, rising costs, increased competition and rigorous supervision all had a huge impact on the traditional development model. Technological innovation faces "difficulty", that means "intrusion is difficult" and "innovation is more difficult". How to ensure that the economy stabilizes at a certain level of growth, while transformation and change is an important test.

Zhou Jingwei, director of macroeconomics and policy at China Bank's International Finance Institute, said that the implementation of a "six stable" policy will remedy a small amount of financial resources, M2 and social growth will stabilize at a low level, both private and small, and micro- funds. Sex should improve.

"Liquidity will remain reasonable and the interest rate on the money market will be further explored, the stock market is stabilizing and is expected to rise again." Attention should be paid to the deterioration of the financial situation of the company and the strengthening of the financial environment. Financial markets, such as exchange rates, may exceed expectations, "Zhou said.

In 2019, local investment bonds, Li Peijun, the leading macroeconomic and policy researcher at the Bank of China's International Finance Institute, said local debt growth was relatively fast. There are three possible ways to put higher demands and limit debt risks on a given scale: First, speed up the opening of the front door and increase central government payments; second, manage projects that were too fast in the previous period, third to speed local special projects. Bond space.

In 2018, the global banking industry's growth uncertainty increased, and some emerging markets were turbulent, the banking industry in the various countries remained broadly stable, but the impact of the Fed's rise in interest rates, business frictions, and regulatory strengthening of the banking sector gradually emerged.

The report considers that, in the global development environment for banking, obvious structural changes occur in 2018 that curb the growth of banking business and income, some risk factors are increasing, which has an impact on the bank's capital deviation and the rate of profit.

Since 2018, the Fed has maintained an increased interest rate, the target rate for federal funds has so far increased to 2.25%, up 0.75 percentage points since the beginning of the year. Continued interest rate growth The Fed has set the tone for global monetary policy. The Fed's increased interest rates influenced some advanced economies one at a time, and interest rates gradually moved closer to the long-term neutral level. For example, the Bank of England raised its interest rate from 0.5% to 0.75% and the Bank of Canada raised its interest rate from 1% to 1.75%. The eurozone and Japan, which implement quantitative easing and negative interest rates, are also actively considering the end of release and the normalization of interest rates.

At the same time, monetary policy in the emerging economies is in a diversified state. In response to the rise in Fed interest rates and the weakening of local capital and capital outflows, some emerging economies have been guided by a policy of raising interest rates. In response to the Lira crisis, Turkey raised its interest rate from 7.25% to 22.5%, Indonesia adjusted the reference rate from 4.25% to 6%, India and Malaysia also raised rates. Some countries with emerging economies have adopted interest rate cuts in response to pressure to reduce domestic economic growth. For example, the Brazilian central bank lowered its benchmark interest rate from 14.25% in 2015 to 6.5% today, Russia declined from 11% to current 7.5%; The People's Bank of China maintained a stable neutral political stance, and the interest rate center declined steadily.

Wang Jiaqiang, head of banking research at the Bank of China Institute of International Financial Research, said that the transformation of assets and liabilities is an important function of the bank. As the duration of the bank's liability is lower than the asset's duration, the monetary environment is neutral in the policy cycle. The Bank's net interest margin can be gradually restored, which will provide significant profit support.

In terms of assets and liabilities at the end of the third quarter, assets and liabilities of listed banks amounted to 158.1 trillion yuan and 145.9 trillion yuan, with a growth rate of 7.1% and 6.7%. At the same time, the assets and liabilities of the banking financial institutions amounted to 264 trillion yuan and 243 trillion yuan, with a growth rate of 7%, respectively. 6.7%. At the end of the third quarter, listed banks constituted 53.9% of loans, representing a year-on-year increase of 1.8 percentage points, deposits representing 73.4% of liabilities, a year-on-year increase of 0.89 percentage points.

The report presented ten forecasts for the development of the global banking industry in 2019: 1. The global banking sector has increased the pressure on the environment, 2. Global financial supervision has become tighter and some countries have relaxed, 3. The regional structure of the foreign banking sector development has been further optimized, 4. Developing countries' economic growth is not synchronized and the banking sector is highly differentiated 5. Development of the banking industry in developing countries is facing new challenges 6. Return to the original source has been the stable growth rate of the Chinese banking sector and the growth rate is around 8%. Stable growth in China's banking industry is steadily rising 8. China-listed banks are deepening their reforms in a fast-paced period 9. Firm policies in the Pratt & Whitney industry remain, and digital inclusive finance is becoming an important development trend. Financing of the Financial System The repairs provide an opportunity for transformation of business in the field of bank management.